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Bitcoin – What is it and why is there such a hype over it?

January 11, 2018

For several months now we have heard the word “Bitcoin” thrown about both the digital and financial industries, but what actually is it and why are people going crazy for it?

Bitcoin is a type of cryptocurrency (a digital asset exchanged via cryptography to secure its transactions) that both individuals and corporations use as a worldwide payment system. In other words it can be used as a payment for actual goods, and it can also be bought sold and traded.

The reason why there is such a hype about it in the media, is because it’s the first decentralized digital currency that functions without an administrator or bank. This means transactions take place directly between the users. To achieve a successful transaction a network of nodes needs to verify said transaction using cryptography, which will also be recorded in a public shared ledger. This shared or “distributed ledger” is a digital agreement that can replicated and shared geographically across multiple countries, institutions and of course individuals. Blockchain a system also causing a media stir

Bitcoin runs on the blockchain system which is a form of distributed ledger which can be either private or public. It is maintained by a collection of “miners” which are a range of people from novice tech heads to computer experts. The Miners run mining software to generate Bitcoin, however due to the complexity of the process it can take a fair amount of time to generate one complete Bitcoin. The miners permanently record all of the Bitcoin transactions and upload them in “blocks” to the data chain generated from the mining software. Every time a miner uploads a new block to the chain, they are rewarded with a fraction amount of Bitcoins for doing so.

The price of Bitcoin is forever fluctuating based on what it is being bought and sold for and to whom too. As much as industry professionals would like to believe that people are investing in it because of its elite technology, by the end of 2017 people were just investing in it because of its continuous supply. It is known worldwide that the Bitcoin supply will be capped when it reaches 21 million coins, and so far 16.7 million coins have been generated. You can see why everyone is so eager to get involved.

Like all great solutions there is always someone behind the idea, and in this case that someone has been identified as Satoshi Nakamoto. Although the name is currently at the epicentre of all the Bitcoin hype, the actual person(s) is unknown and the name is a mere pseudonym. What we do know is that there were several identities linked to Satoshi Nakamoto yet still to this day the real identity is unknown. Although Bitcoin seems like a pretty recent topic there’s evidence to prove the development started just under a decade ago. Soon after the manifestation of Bitcoin the unknown Satoshi Nakamotothen went on to formulate the very first Blockchain database, and the rest is history.

It’s not likely that the Bitcoin hype is going to die down anytime soon, however as the winds have slowly started to change certain experts are proclaiming that if you’re not already invested in the Bitcoin phenomenon, it’s unwise to start now as it’s deemed un profitable.